Preferential Treatment of Claims of Blockading Powers against Venezuela (Germany, Great Britain and Italy v. Venezuela)

At the beginning of the twentieth century Germany, Great Britain, Italy and certain other states raised various financial claims against Venezuela. In 1902, Germany, Great Britain, and Italy blockaded the ports of Venezuela in order to enforce their claims. In an agreement concluded on February 13, 1903, Venezuela recognized in principle the validity of the claims of the blockading powers and consented to a 30% levy on the monthly custom revenues of the ports of La Guayra and Puerto Caballo for the repayment of these claims. Similar action was taken for the claims of other states. However, the blockading powers argued for preferential treatment of their claims. Venezuela disagreed and the question of distribution of revenues between the blockading powers and other creditors was not resolved in the agreement of February 1903.

The three blockading powers (Germany, Great Britain, and Italy) and Venezuela decided to submit the issue to arbitration. The Tribunal was asked to determine whether the blockading powers were entitled to preferential or separate treatment in the payment of their claims against Venezuela.

The Tribunal ruled that the blockading powers, by permitting other powers to benefit from the agreement of February 1903 could evidently not have intended to renounce either their acquired rights or their actual privileged position. The Tribunal further noted that the Government of Venezuela had not protested when the blockading powers insisted on special security for the settlement of their claims, nor had the neutral powers protested against the blockading powers' claims for preferential treatment. The Tribunal unanimously held that the blockading powers were entitled to preferential treatment and that while the neutral powers had been able, in some respects, to benefit from the circumstances created by the military operations, they had not acquired any new rights.